![]() Facilities like the credit master sheet or early warning list help you monitor the customer’s credit situation.Can I afford to block customers (small customer base)?Īssuming that we already have SD and AR implemented, credit management can be broadly used to:.What is the volume of blocked orders my F&A department can handle?.Do I block orders from important customers, or do I grab a phone?.Key challenge: Reducing credit risk without hampering the supply chain.ĭealing with Bad Debt: Before getting involved, ask yourself: This credit management comes partially under preview of Sales and Distribution (SD) and partially of Account Receivables (AR). For some customers, the risk perceived may be high such that we may demand payment in advance. So, according to the risk foreseen, the amount and time of credit (Credit Exposure) granted changes. But, this payment at a future point of time involves risk. ![]() ![]() Credit facility is just like telling our customers that they need not pay immediately, they can pay at a future point of time after receiving the goods or services. Credit management is the management of credit facility granted to customers as credit exposure allowed. ![]()
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